Newman v. Metropolitan Life Insurance Co.

Margery Newman, on behalf of herself and all others similarly situated, Plaintiff-Appellant,v.Metropolitan Life Insurance Company, Defendant-Appellee.

Argued
September 19, 2017

Appeal
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 16 C 3530 -
Thomas M. Durkin, Judge.

Before
Wood, Chief Judge, and Easterbrook and Rovner, Circuit
Judges.

Wood,
Chief Judge.

At age
56, Margery Newman purchased a long-term-care insurance plan
from the Metropolitan Life Insurance Company
("MetLife"). She opted for one of MetLife's
non-standard options for paying her insurance premiums;
MetLife called the method she selected "Reduced-Pay at
65." When Newman was 67 years old, she was startled to
discover that MetLife that year more than doubled her
insurance premium. MetLife insists that the increase was
consistent with Newman's insurance policy, including its
Reduced-Pay-at-65 feature. Newman was unpersuaded and brought
this action to vindicate her position. The district court
dismissed for failure to state a claim. We conclude, however,
that the dismissal was premature, and that Newman's
complaint plausibly has alleged facts entitling her to
relief. We therefore reverse and remand for further
proceedings.

I

Two
documents lie at the heart of this case. The first is
Met-Life's "Long-Term Care Facts" brochure,
which Newman reviewed before purchasing her insurance plan.
The brochure describes long-term care generally and catalogs
MetLife's non-standard payment options. Newman learned of
Met-Life's Reduced-Pay option from the brochure. The full
description reads as follows:

Reduced-Pay
at 65 Option:

By paying more than the regular premium amount you would pay
each year up to the Policy Anniversary on or after your 65th
birthday, you pay half the amount of your pre-age 65 premiums
thereafter.

At the
foot of the same page, MetLife instructs the reader that the
brochure is only a general overview of MetLife's
insurance plans, and that the policy governs the terms of the
agreement.

Equipped
with this information, Newman purchased a long-term-care
insurance plan from MetLife and selected the Reduced-Pay
option. Roughly a week later, she received the policy-the
second critical document. The policy is 29 pages long. It
includes just one reference to the Reduced-Pay option:

In addition, you have selected the following flexible
premium payment option: Reduced Pay at 65 Semi-Annual Premium
Amount:

Before Policy Anniversary at age 65 $3231.93

On or after Policy Anniversary at age 65 $1615.97

Elsewhere,
the policy reserves MetLife's right to change the
premium. On the first page, MetLife announces that
"PREMIUM RATES ARE SUBJECT TO
CHANGE." The same paragraph continues with the
statement that "[a]ny such change in premium rates will
apply to all policies in the same class as Yours in the state
where this policy was issued." In a section titled
"Premiums, " MetLife "reserve[s] the right to
change premium rates on a class basis." Similar language
is included in the "5% Automatic Compound Inflation
Protection Rider." The policy defines more than 30
terms, but the word "class" is not among them. And
the appended "Contingent Benefits Upon Lapse Rider,
" which provides coverage options in the event of a
"Substantial Premium Increase, " includes a table
illustrating that that term's meaning varies with the
policyholder's age at the time the policy was issued. The
table accounts for policyholders who were issued their policy
at ages up to "90 and over." Newman had the
opportunity to review the policy for 30 days and return it
for a full refund if she was dissatisfied.

From
the outset, Newman paid the elevated premium associated with
her Reduced-Pay option. When she reached age 65, her premium
was cut in half. After Newman turned 67, however, MetLife
doubled the premium. MetLife represents that this increase
has been imposed on a class-wide basis, which it said at oral
argument means all long-term-care policyholders, including
Reduced-Pay policyholders over the age of 65. MetLife defends
the increase by noting that Newman still pays half the
premium of a Reduced-Pay policyholder who has not yet reached
age 65, and far less than she would if she had not purchased
the ...

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